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FTSE 100 closes up as rally continues but US shares lag

A bad day for sterling but a good day for blue-chip equities
FTSE 100 image
Sterling's loss was the Footsie's gain
  • FTSE 100 index closes up

  • US benchmarks open lower

  • Brexit rumbles on

FTSE 100 closed the day firmly higher as Brexit continues to dominate headlines but markets shrugged off the tensions.

The UK blue-chip index finished up over 73 points at 7,391 on a day where it had earlier hit its highest level since early October as financial stocks were among the top gainers.

FTSE 250 was also up - adding around 90 points at 19,329.

The German DAX gained around 72, while the CAC 40 in France also advanced, up almost 18 points.

On Wall Street, the Dow Jones Industrial Average is down  around 113 points at the time of writing and the S&P 500 is also in negative territory.

4.00pm: Top-shares index knocking on the door of 7,400

 The FTSE 100 eased past the 7,400 level before easing back a little on the day the pound took a licking on foreign exchange markets.

The gauge of London's leading shares was up 77 points (1.1%) at 7,394.

Sterling, meanwhile, was down two-thirds of a cent against the US dollar at around US$1.3035 after last night's inconclusive Brexit votes in the House of Commons.

It could've been worse, though, according to Ken Odeluga at City Index.

“The key difference in sterling’s reaction compared to the first indicative round is that the pound hasn’t fallen as far; at least not yet,” he observed.

“Ignoring the immediate late-night drop on 27th March and counting just the full session last Thursday, sterling shed 183 pips against the dollar. A day later, the rate slammed through psychological $1.30 after MPs rejected MV2.5, before bouncing at $1.2976. The pound slumped 125 pips post-Monday voting, bouncing well above $1.30,” he said, adding that the “sterling impasse reflects the political impasse”.

2.45pm: US indices open lower after durable goods data

The FTSE 100 reacted phlegmatically to US indices opening lower in the wake of the US durable goods numbers for February.

The UK index of leading shares was up 74 points (12.0%) at 7,391, while in the US, the Dow Jones industrial average was down 82 points (0.3%) at 26,177 while the broader-based S&P 500 was off 3.6 points (0.1%) at 2,863.6.

US durable goods orders fell 1.6% month-on-month in February, compared to economists’ expectations of a 1.8% fall.

The fall was attributed to a 31.1% decline in orders for non-defence aircraft; excluding the transportation sector, durable goods orders were up 0.1%, giving a year-on-year rise of 2.6%, which was the smallest gain since February 2017.

“Durable goods inventories rose by 0.3% m/m in February and the inventory-shipments ratio was unchanged and remains low, indicating that, despite softening demand, a major pull-back in production is not needed,” commented Mickey Levy at Berenberg.

“Taken together, activity in durable goods industries remains sluggish, but there are some indicators pointing to a turnaround: 1) if the improvement in China manufacturing PMIs is sustained, that would lift global trade and industrial activity and sentiment; and 2) if oil prices stabilise near current levels, demand for oil field and gas field machinery would receive a boost,” he added.

2.15pm: Top-shares index at its highest level since early October

The FTSE 100 extended its gains over the lunchtime session, even as sterling stabilised on foreign exchange markets.

The index of heavyweight shares was up 76 points (1.0%) at 7,393 while sterling continued to hover around US$1.3035, down 0.7 cents against the greenback.

You have to go back to 4 October for the last time the index was at these nosebleed inducing heights.

“While the European indices perked up as Tuesday went on, sterling remained miserable – but not quite as miserable as it could have been – following last night’s indicative votes bungle.

“The pound is going to spend the day waiting for the outcome of Theresa May’s Cabinet meeting, a Tory rumble that could set the fate of the party, the nation and Brexit,” said Connor Campbell, in melodramatic form at Spreadex.

Among the blue-chips, mutual funds supermarket Hargreaves Lansdown PLC (LON:HL.) was wanted, rising 2.3% to 1,920p, after Citigroup upgraded the stock to ‘neutral’ from ‘sell’.

Drugs developer AstraZeneca PLC (LON:AZN) went the other way, shedding 47p at 6,122p after UBS downgraded the stock to ‘sell’ from ‘neutral’, although HSBC nudged up its price target by 40p to 5,180p while continuing to advise clients to reduce their holdings.

12.30pm: Bitcoin closing in on US$5,000 level

The FTSE 100 was close to its intra-day high as futures markets pointed to US markets opening flat.

The index of leading shares was up 56 points (0.8%) at 7,374, with the advance gaining renewed impetus in the final hour of the morning session as expectations of a soft start on Wall Street were replaced by predictions of a modestly firmer opening.

Monday's rise in bond yields has attracted buyers to financial stocks such as Prudential PLC (LON:PRU) and Standard Chartered PLC (LON:STAN), up 3.3% and 3% respectively.

The Brexit saga has not been good for much but it has at least kept bitcoin out of the headlines – until today, that is.

The cryptocurrency shot up US$653 (16%) to US$4,800 today, getting the speculators and runes readers excited.

“Bitcoin was one of the main talking points across financial markets today after suddenly climbing to its highest level since November 2018 above $5000,” reported Lukman Otunuga, a research analyst at FXTM.

“While sudden and explosive swings are nothing new in the world of cryptocurrency, Bitcoin has certainly struggled for direction in recent months as investors evaluated the possibility of its adoption by the mainstream. Although the reason behind Bitcoin’s aggressive 23% jump remains a mystery, it does suggest that bulls could be back in town,” Otunuga said.

Since touching a low point of US$3,136 in December 2018, the bitcoin price has soared for the usual reason: more buyers than sellers.

Why this should be so remains a mystery but some analysis suggests that the price is going up because it is going up.    

Back in the world of bricks and mortar, IHS/Markit reported that the UK construction purchasing managers' index in March rose to 49.7 from 49.5 in January – still below the 50-point level that marks the transition from contraction and expansion.

“The sustained decline in total construction activity represented the first back-to-back fall in output levels since August 2016, although the rate of decline remained only marginal in March,” the market research group said.

“Commercial construction was the worst performing area during the latest survey period, with business activity dropping to the greatest extent since March 2018. There were widespread reports that Brexit uncertainty and concerns about the domestic economic outlook had led to risk aversion among clients. Civil engineering activity also fell in March, although the rate of decline eased since February,” it added.

Howard Archer, the chief economic advisor to the EY ITEM Club, said it was a “largely weak survey with few redeeming features”.

“The first quarter average level of 50.0 pointed to flat construction activity and was significantly below the fourth quarter 2018 average of 53.1. It was also under the overall 2018 average of 52.2.

“Construction activity was particularly held back in March by commercial activity which contracted at the fastest rate for a year. Civil engineering also contracted, although at a reduced rate compared to February. House building growth picked up slightly but was weak and still well below long-term norms,” Archer noted.

11.30am: US markets to take pause for breath

The FTSE 100 is trading at levels not seen since last October despite the Gordian knot that is Brexit remaining as tangled as ever.

The Footsie was up 38 points (0.5%) at 7,355, with more than two-thirds of the index's constituents in positive territory.

Across the pond, the benchmarks are expected to open lower, although that may change when US durable goods numbers are released at 1.30pm.

“Wall Street seems set to pause for breath today after that upbeat start to the week. The improvement in Chinese data yesterday certainly gave some cause for cheer, but the equally robust ISM prints from the US do again make it difficult to justify arguments in favour of a quick rate cut by the Fed. With the prospect of a return of cheap money being pushed a little further out, this is going to take some of the heat out of equities as a result,” predicted James Hughes at Axi Trader.

Hughes reported that a month-on-month contraction in US Durable Goods orders is expected.

“Weakness here could counter some of the inertia over action from the Fed. Critically, however, there’s a need to avoid any kind of inflationary bubble, so data points later in the week, including Friday’s average wage data, will likely also be key in forming a better picture as to when any shift in monetary policy – beyond the termination of quantitative tightening – will be seen,” Hughes said, adding that Axi Trader expects the Dow Jones 30-share to open 38 points lower at 26,220 and the S&P 500 to start 5 points off the pace at 2,862.

Back in the UK, the top performing share belonged to an Indian infrastructure firm, which is not something that happens very often.

Infrastructure India PLC (LON:IIP) doubled to 1.95p after it finally secured financing for its logistics subsidiaries plans to build a shed-load of terminal facilities.

The biggest faller was Pantheon Resources PLC (LON:PANR) after the latest update from the Alkaid well on Alaska’s North Slope.

READ Pantheon Resources share slump as latest Alaska results disappoint

 

10.40am: The Footsie comes off the top

The FTSE 100 was about midway between its high point for the day and last night's closing value.

The Footsie was sitting on a 28 point gain at 7,346, having hit 7,367 at one point, with sentiment boosted by the weakness of sterling.

“Sterling remains above the key $1.30 and €1.16 levels despite Parliament failing to find a majority for an alternative way forward on Brexit last night,” commented Michael Brown, a senior analyst at Caxton FX.

“Despite political headwinds facing the pound intensifying and the stalemate in Westminster continuing, sterling is likely to remain within its current range, possibly with pressure to the downside, until decisive action is taken to break the impasse, something which becomes more likely as we edge closer to the 12th April deadline. This could come in the form of a general election, approval of a deal or legislation to prevent a no-deal exit,” Brown speculated.

Regarding the approval of a deal, stranger things have happened, such as a revival in enthusiasm for Bitcoin.

“It feels like a blast from the past when I look at a bitcoin chart this morning, with the cryptocurrency – which has been in consolidation mode and rather boring since November – soaring more than 20% in under an hour. If there was a catalyst for the move then it’s a well-kept secret right now which suggests there may be something more technical at play,” confessed Craig Erlam at OANDA.

More buyers than sellers, perhaps?

“Every time we’ve traded around $4,200-4,400 since late November, [the price] ... has peaked and headed south. Interestingly though, we have seen a series of higher lows in that time – which means traders are buying the dips higher each time,” Erlam noted.

“Whatever the catalyst was for the move above $4,400 this morning, the move was likely exacerbated by a combination of excited bulls and panicking sellers. The volatility may well remain in the coming days which will keep things interesting and if we can hold above $4,400 then it could be a near-term bullish signal, with $6,000 being notable resistance above,” he added.

Meanwhile, back in the world of physical goods – albeit ones that disappear after being consumed - the monthly figures from market research firm Kantar Worldpanel for UK supermarket market shares were announced this morning.

“The trend remains for Aldi and Lidl to keep chipping away at the market share of the established UK names, with Tesco falling to 27.4% from 27.6% one year ago and Sainsbury’s down to 15.4%,” observed Graham Spooner at The Share Centre.

“The company under most pressure appears to be Sainsbury’s with year on year sales down by 1.8% and this is reflected in the shares dropping by around 0.9%. This highlights the reason why there has been corporate activity in the sector with Sainsbury’s attempting to get into bed with Asda. Unfortunately, the regulator does not share the same enthusiasm for a tie-up, increasing the chances that the deal will not go through,” Spooner noted.

“Long-suffering investors may have benefited from lower prices in the shops, but as a result have dealt with a sideways share price trend, and at the moment there appears to be little reason for that trend to change,” he opined.

 

J Sainsbury PLC (LON:SBRY) was among the worst blue-chip performers, shedding just over 1%.

9.30am: Pound's weakness a boon for the FTSE 100

The FTSE 100 was holding on to gains, helped by the pound being friendless on foreign exchange markets.

At 7,355, the Footsie was up 38 points on the day, with investors shrugging off the latest instalment in the Brexit saga last night.

On the foreign exchange markets, the pound was down two-fifths of a cent against the US dollar at US$1.3064.

“British lawmakers have again failed to generate a majority for any alternative Brexit proposal. They will get a third opportunity to do this on Wednesday, where we still think MPs might decide to back a softer stance - or perhaps even a combination of Brexit options - but with time running out and the EU's rhetoric hardening, fears of 'no deal' are rising,” said James Smith, who covers developed markets at ING Economics.

 

Despite the index's rise there was also revived enthusiasm for dull but dependable utilities, such as Centrica PLC (LON:CNA) and SSE PLC (LON:SSE), up 0.6% and 1.3% respectively, while housebuilders were out of favour, with the likes of Persimmon PLC (LON:PSN), Taylor Wimpey PLC (LON:TW.) and Barratt Developments PLC (LON:BDEV) all suffering falls of 1% or more.

8.50am: Strong start for Footsie

If equity traders were largely ignoring the impact of a potential no-deal Brexit, their counterparts on the currency markets weren’t as the pound lost further ground in the aftermath of the latest Westminster pantomime.

The index of blue-chip shares rose 42 points to 7,359.53, led by the foreign currency earners as the sterling dipped, but managed to stay (just) above US$1.30.

“Last night’s events took on a familiar look with MPs united in stating what they didn’t want as fourth parliamentary indicative votes went the same way as last week’s indicative votes,” said Michael Hewson, an analyst at CMC Markets.

“On the bright side there did appear to be some movement with the various options losing by a small number of votes, with the customs union option falling short by three votes, 273 to 276.”

Brexit-hit airline easyJet (LON:EZJ) bounced regained some of Monday’s lost ground following its mini-warning. It bounced 1.9%, with tour operator TUI (LON:TUI) following it its vapour trail with a 1.5% advance.

Sentiment was aided by budget carrier Wizz Air (LON:WIZZ), whose performance appears to be immune to the current downturn in consumer spending. Its shares were up 4.6% in the wake of its latest update.

Rolls-Royce (LON:RR.) succumbed to some minor selling pressure after Singapore Airlines grounded two Boeing 787 aircraft due to issues in its Trent 1000 TEN engines.

Proactive news headlines:

Tekcapital PLC (LON:TEK) has unveiled a new strategic partnership with a technology incubator and accelerator programme in Peru. The AIM-quoted firm is teaming up with Emprende UP which is part of Universidad del Pacífico (UP), Peru’s leading business school.

Mirada PLC (LON:MIRA) has announced the commercial launch of Iris, a multiscreen solution for its contracted service with Bolivian partner Digital TV Cable Edmund. Iris allows Digital TV Cable's subscribers to watch live and on-demand content across all devices, with the seamless user experience and advanced functionalities.

European Metals Holdings LTD (LON:EMH) has successfully developed a flow sheet for the production of battery-grade lithium hydroxide from ore from the Cinovec project in the Czech Republic.

Eden Research PLC (LON:EDEN) has reported a jump in full-year revenues as its product sales increased by 112% helping the biopesticides group swing to an operating profit.

Belvoir Lettings PLC (LON:BLV), which runs a network of more than 300 lettings and estate agencies, has made an encouraging start to 2019.

Live Company Group Plc (LON:LVCG) shares were lifted in early deals on Tuesday after it said it is to take responsibility of promoting, managing, and operating its flagship BRICKLIVE show in the UK for the first time.

UK medicinal cannabis investor Sativa Investments PLC (NEX: SATI) has teamed up with King's College London to research the impact of cannabinoids on inflammation and respiratory diseases. Under the research agreement, Sativa will supply the university with specific strains of cannabis plants that contain various combinations of the spectrum of at least 113 known cannabinoids, subject to regulatory approval.

Location Sciences Group PLC (LON:LSAI) expects its ad fraud detection technology to make “significant waves” in the digital advertising industry this year.

Arix Bioscience PLC (LON:ARIX) said it had increased its stake in investee company Aura Biosciences after backing the latter’s £31mln (US$40mln) Series D financing round. Arix committed £3.4mln, taking its holding in the ocular oncology specialist to 7.7%.

Next Fifteen Communications Group PLC’s (LON:NFC) chief executive Tim Dyson has said the digital marketing group has “lots of scope” for acquisitions in the coming year after the company reported a 23% jump in pre-tax profits for 2018.

Taptica International Ltd (LON:TAP) has issued a profit warning about RhythmOne just a day after completing its acquisition. RhythmOne's trading in the year to March was below market expectations Taptica said today, though it still believes the acquisition was in its best interests.

Corero Network Security PLC’s (LON:CNS) partnership agreement with network giant Juniper Networks (NYSE:JNPR) has yielded its first revenue generating order.

Clinigen Group PLC (LON:CLIN) now owns the global rights to cancer drug Proleukin after its acquisition of the US rights was cleared by competition regulators across the pond.

BlueRock Diamonds PLC (LON:BRD) produced 42,409 tonnes of ore from its Kareevlei diamond mine in the Kimberley region of South Africa during the first quarter of 2019. During the period the company sold 1,847 carats sold, a year-on-year increase of 18%.

Bluejay Mining PLC (LON:JAY) expects to deliver updated resource calculations for the Iterlak East, Iterlak West and the Offshore Shallow Marine mineral sands targets in Greenland within the next two months.

Charaat Gold Holdings Ltd (LON:CGH) yesterday announced a proposed a US$11mln capital raising to meet its near-term funding plans. The company plans to raise the funds through the issue of convertible bonds and the placement of ordinary shares.

Geencoat UK Wind PLC (LON:WIND) has announced the appointment of Lucinda Riches as a non-executive director of the company with effect from 1 May 2019. The group said Riches has extensive experience in investment banking, specialising in the capital markets sector having worked for Chase Manhattan Bank, followed by 21 years with UBS Investment Bank, where her ultimate role was Global Head of Equity Capital Markets.

Caledonia Mining Corporation PLC (LON:CMCL) today declared a quarterly dividend of US$0.06875 on each of the company's common shares.

IronRidge Resources Limited (LON:IRR), the African focused minerals exploration company, said it is holding a shareholder update meeting and presentation followed by a Q&A session today at 6:00 pm (UK local time), at 1 America Square, 17 Crosswall Street, London EC3N 2LB. It added that Vincent Mascolo, CEO and Managing Director, and Len Kolff, Chief Operating Officer, will host the evening.

BigDish Plc (LON: DISH), the food technology company that operates a yield management platform for restaurants, announced that its new website will go live this week. Sanj Naha, BigDish’s CEO commented: “We are getting closer to the point where the rapid expansion across the UK that we have planned will take place."

Asiamet Resources Limited (LON:ARS) said it will be attending the Mines and Money Asia Conference in Hong Kong from 2-4 April, one of the largest resource investment forums in Asia and attended by leading investors from Asia and around the world.

6.45am: FTSE 100 predicted to rise 

The FTSE 100 index is expected to edge higher on Tuesday, extending a recent rally after overnight gains from US and Asian markets and with the pound easier as all eyes remain on the Brexit deadlock after UK MPs again failed to back any possible alternate options to Thersea May's rejected EU deal

Spread betting firm IG expects the blue-chip index to open around 13 points higher at 7,330 having added 38 points on Monday.

Overnight on Wall Street, the Dow Jones Industrials Average closed 329 points, or 1.3% higher at 26,258 after some mixed data provided signs of hope for the slowing US economy, with retail sales weak but manufacturing surveys positive.

The gains today in Asia were more muted, with Japan’s Nikkei 225 index and Hong Kong’s Hang Seng index both up just 0.1% as the attention also remains focused on any progress in Sino-US trade negotiations.

 On currency markets, sterling stayed cautious against the US dollar and the euro as traders await the next twists in the Brexit saga.

Name Aslam, markets analyst at Think Markets Limited commented: “The chaos continues in the UK and it seems that politicians are determined to make Brexit an absolute mess.”

He added: “The only sensible thing for Theresa May to do is to step aside and let someone else take control of Brexit. Unfortunately for the UK, she is as stubborn as she can be, and the evidence of this comes from the fact that she is still considering bringing back the vote in parliament in relation to the bad deal she secured.”

Small Caps in focus

No blue-chip corporate news is on the agenda for Tuesday, but a number of smaller companies will be putting out updates.

Given the Brexit impasse, the possibility of a UK general election in the near future has likely risen, so first-half numbers from polling firm YouGov PLC (LON:YOU) could be of some interest.

The FTSE Small Cap group issued a strong pre-interim close trading update at the end of January which said that full-year numbers would be ahead of expectations.

Analysts at Peel Hunt raised their forecasts then, as a result, and they expect the first-half numbers to show strong organic growth in data and services which is the main focus of the group, while segmental margins are expected to continue to expand.

In a preview, they pointed out: “The company has been testing YouGov Direct for a couple of months. We look to hear on the results of the testing which we expect to be positive.”

Superdry showdown

Away from results, Tuesday also brings Superdry PLC’s (LON:SDRY) extraordinary general meeting to consider the reappointment of founder Julian Dunkerton to the board, along with Peter Williams as a non-executive director.

Press reports have suggested that Dunkerton has the backing of two large shareholders, with a combined vote of 9.2%, which added to this shareholding and that of fellow founder James Holder would give him control of around a 37% stake. To be successful in his bid, analysts think that Dunkerton will need to reach around 45% based on a typical EGM turnout.

Significant events expected on Tuesday, April  2:

Interims: YouGov PLC (LON:YOU)

Finals: Eden Research PLC (LON:EDEN), Belvoir Lettings PLC (LON:BLV), Next Fifteen Communications Group Plc (LON:NFC), Hostelworld Group PLC (LON:HSW), DP Eurasia NV (LON:DPEU), Hydrogen Group PLC (LON:HYDG), MP Evans Group PLC (LON:MPE), Nucleus Financial Group PLC (LON:NUC), Proteome Sciences plc (LON:PRM), TP Group PLC (LON:TPG), Trinity Exploration & Production PLC (LON:TRIN)

Economic data: UK construction PMI; US durable goods orders

 Around the markets:

  • Sterling: US$1.3066, down 0.1%
  • Gold: US$1,286.13 an ounce, down 0.1%
  • Brent crude: US$69.14 a barrel, up 0.1%

City Headlines:

  • MPs for a second time last night rejected an alternative to Theresa May’s Brexit deal, handing the initiative back to Downing Street to find a way out of the impasse – The Times
  • Shares in Lyft, the ridesharing company, stalled on Monday, falling below their initial public offering on their second day of trading – The Guardian
  • Saudi Aramco has revealed that the group generated US$111.1bn in net income last year, almost double that of Apple and five times that of rival oil producer Royal Dutch Shell - Financial Times
  • Low & Bonar's stocks plunged nearly 20% after it warned profits for the year will be lower than anticipated - Daily Mail
  • Boots is preparing to set up shop in a former Marks & Spencer site that shut due to crippling business rates - Daily Mail
  • ISG, one of the UK’s largest privately held construction firms, made £27mln in pre-tax profits in 2018, up from £9mln the year before, defying turbulence in the sector following the collapse of Carillion - The Daily Telegraph
  • The government was forced to take control of the Birmingham prison, stripping G4S permanently of its contract to run the failing jail - The Guardian
  • Dan Wagner, the founder of a collapsed technology group Powa, has avoided bankruptcy after reaching a settlement with creditors who were seeking US$4mln from him - The Times
  • The Financial Conduct Authority will appoint an independent individual to examine its role in handling of London Capital & Finance, a collapsed investment company that raised £237mln selling unregulated mini-bonds to savers who will now suffer heavy losses - The Times
  • A cross-party committee of MPs has urged to break up Britain’s largest accounting firms to avoid a repeat of audit failures that have deeply undermined public confidence in the profession – Financial Times
  • Outlook for UK business darkens fast ahead of Brexit, BCC warns - Reuters
  • German manufacturing contracted at its fastest rate in six and a half years last month due to slowing global demand, trade disputes and uncertainty about Brexit - The Times

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